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National Insurance Contributions Act

2014CHAPTER 7

Explanatory Notes have been produced to assist in theunderstanding of this Act and are available separately

£ . 5 75

National Insurance Contributions Act 2014

CHAPTER 7

CONTENTS

Employment allowance1 Employment allowance for national insurance contributions2 Exceptions3 Connected persons4 How does a person who qualifies for an employment allowance receive it?5 Power to amend the employment allowance provisions6 Decisions and appeals about entitlements to make deductions etc7 Retention of records etc8 Commencement of the employment allowance provisions etc

Introduction of age-related secondary percentage9 Reduction of secondary Class 1 contributions for certain age groups

Application of general anti-abuse rule to national insurance contributions10 GAAR to apply to national insurance contributions11 Power to modify application of GAAR to national insurance contributions

Oil and gas workers on the continental shelf12 Oil and gas workers on the continental shelf: secondary contributors etc

Partnerships13 Class 4 contributions: partnerships14 Limited liability partnerships

National Insurance Contributions Act 2014 (c. 7)ii

Other provision15 Office holders who receive “earnings” to be employed earners16 Armed Forces early departure payments retrospectively disregarded17 Repeal of certain redundant reliefs relating to Class 4 contributions18 Certain orders and regulations in respect of Northern Ireland

General19 HMRC administrative expenses: financial provision20 Abbreviations of Acts21 Short title and extent

Schedule 1 — Employment allowance: rules for determining if persons are“connected”

Part 1 — CompaniesPart 2 — Charities

Schedule 2 — Office holders in receipt of “earnings” to be employed earners:consequential provision

ELIZABETH II c. 7

National Insurance Contributions Act 2014

2014 CHAPTER 7

An Act to make provision in relation to national insurance contributions; andfor connected purposes. [13th March 2014]

E IT ENACTED by the Queen’s most Excellent Majesty, by and with the advice andconsent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—

Employment allowance

1 Employment allowance for national insurance contributions

(1) A person qualifies for an employment allowance for a tax year if, in the taxyear—

(a) the person is the secondary contributor in relation to payments ofearnings to, or for the benefit of, one or more employed earners, and

(b) in consequence, the person incurs liabilities to pay secondary Class 1contributions,

under SSCBA 1992 or SSCB(NI)A 1992 (or both).

(2) The person’s employment allowance for the tax year is—(a) £2,000, or(b) if less, an amount equal to the total amount of the liabilities mentioned

in subsection (1)(b) which are not excluded liabilities.

(3) Subsection (1) is subject to sections 2 and 3 (and Schedule 1).

(4) Sections 2 and 3 (and Schedule 1) set out cases in which a person cannot qualifyfor an employment allowance for a tax year.

(5) Section 2 also sets out the cases in which liabilities to pay secondary Class 1contributions are “excluded liabilities”.

B

National Insurance Contributions Act 2014 (c. 7)2

(6) Section 4 provides for a person who qualifies for an employment allowance fora tax year to receive it by way of deductions or a repayment under that section.

(7) In this Act references to “the employment allowance provisions” are to thissection, sections 2 to 4 and Schedule 1.

(8) In the employment allowance provisions and section 5 terms used which arealso used in Part 1 of SSCBA 1992 or SSCB(NI)A 1992 have the same meaningas they have in that Part.

2 Exceptions

Public authorities

(1) A person cannot qualify for an employment allowance for a tax year if, at anytime in the tax year, the person is a public authority which is not a charity.

(2) In subsection (1)—“charity” has the same meaning as in the Small Charitable Donations Act

2012 (see section 18(1) of that Act), and“public authority” includes any person whose activities involve, wholly

or mainly, the performance of functions (whether or not in the UnitedKingdom) which are of a public nature.

Personal, family or household affairs

(3) Liabilities to pay secondary Class 1 contributions incurred by a person (“P”) are“excluded liabilities” if they are incurred in respect of an employed earner whois employed (wholly or partly) for purposes connected with P’s personal,family or household affairs.

Workers supplied by service companies etc

(4) Liabilities to pay secondary Class 1 contributions are “excluded liabilities” ifthey are incurred by virtue of regulations made under section 4A of SSCBA1992 or SSCB(NI)A 1992 (earnings of workers supplied by service companiesetc).

Transfers of businesses

(5) Subsection (6) applies if a business, or a part of a business, is transferred to aperson (“P”) in a tax year.

(6) Liabilities to pay secondary Class 1 contributions incurred by P in the tax yearare “excluded liabilities” if they are incurred in respect of an employed earnerwho is employed (wholly or partly) for purposes connected with thetransferred business or part.

(7) For the purposes of subsection (5) a business, or a part of a business, istransferred to P in a tax year if, in the tax year—

(a) another person (“Q”) is carrying on the business or part, and(b) in consequence of arrangements involving P and Q, P begins to carry

on the business or part on or following Q ceasing to do so.

(8) In subsection (7)(b) “arrangements” includes any agreement, understanding,scheme, transaction or series of transactions (whether or not legallyenforceable).

National Insurance Contributions Act 2014 (c. 7) 3

(9) In subsections (5) to (7) “business” includes—(a) anything which is a trade, profession or vocation for the purposes of the

Income Tax Acts or the Corporation Tax Acts;(b) a property business (as defined in section 263(6) of the Income Tax

(Trading and Other Income) Act 2005);(c) any charitable or not-for-profit undertaking or any similar

undertaking;(d) functions of a public nature.

Anti-avoidance

(10) A person cannot qualify for an employment allowance for a tax year if, apartfrom this subsection, the person would qualify in consequence of avoidancearrangements.

(11) In a case not covered by subsection (10), liabilities to pay secondary Class 1contributions incurred by a person (“P”) in a tax year are “excluded liabilities”if they are incurred by P, or are incurred by P in that tax year (as opposed toanother tax year), in consequence of avoidance arrangements.

(12) In subsections (10) and (11) “avoidance arrangements” means arrangementsthe main purpose, or one of the main purposes, of which is to secure that aperson benefits, or benefits further, from the application of the employmentallowance provisions.

(13) In subsection (12) “arrangements” includes any agreement, understanding,scheme, transaction or series of transactions (whether or not legallyenforceable).

3 Connected persons

(1) This section applies if—(a) at the beginning of a tax year, two or more companies which are not

charities are connected with one another, and(b) apart from this section, two or more of those companies would qualify

for an employment allowance for the tax year.

(2) This section also applies if—(a) at the beginning of a tax year, two or more charities are connected with

one another, and(b) apart from this section, two or more of those charities would qualify for

an employment allowance for the tax year.

(3) Only one of the companies or charities mentioned in subsection (1)(b) or (2)(b)(as the case may be) can qualify for an employment allowance for the tax year.

(4) It is up to the companies or charities so mentioned to decide which of them thatwill be.

(5) Part 1 of Schedule 1 sets out the rules for determining if two or more companiesare “connected” with one another for the purposes of subsection (1).

(6) Part 2 of Schedule 1 sets out the rules for determining if two or more charitiesare “connected” with one another for the purposes of subsection (2).

(7) In this section and Schedule 1—


“charity” has the same meaning as in the Small Charitable Donations Act2012 (see section 18(1) of that Act), subject to paragraph 8(5) of Schedule1, and

“company” has the meaning given by section 1121(1) of the CorporationTax Act 2010 (meaning of “company”) and includes a limited liabilitypartnership.

4 How does a person who qualifies for an employment allowance receive it?

(1) Her Majesty’s Revenue and Customs (“HMRC”) must (from time to time)make such arrangements as HMRC consider appropriate for persons whoqualify for an employment allowance for a tax year to receive it by makingdeductions from qualifying payments which they are required to make underregulations made under paragraph 6 of Schedule 1 to SSCBA 1992 orSSCB(NI)A 1992 (regulations combining collection of contributions with tax).

(2) In this section “qualifying payment”, in relation to a person who qualifies foran employment allowance for a tax year, means a payment in respect of any ofthe person’s liabilities mentioned in section 1(1)(b) which are not excludedliabilities (see section 2).

(3) If under HMRC’s arrangements a person is permitted to make a deductionfrom a qualifying payment, the person must make the deduction and mustmake it before any other deductions which the person is permitted to makefrom the payment under any other legislation.

(4) HMRC’s arrangements may (in particular)—(a) require deductions to be made at the earliest opportunity in a tax year;(b) provide that deductions may not be made in specified cases;(c) place limits on the amounts of deductions;(d) provide that a person is not permitted to make deductions unless the

person has first given notice to HMRC in such form and manner, andcontaining such information, as HMRC may require.

(5) Subsections (6) to (8) apply in relation to a person who qualifies for anemployment allowance for a tax year if the person has not deducted under thissection the full amount of the employment allowance by the end of the monthof April in which the tax year ends.

(6) The person may apply to HMRC for a repayment, up to the outstandingamount of the employment allowance, of qualifying payments made by theperson; and HMRC must make the repayment.

(7) The person’s application must be made in such form and manner, and containsuch information, as HMRC may require.

(8) The person’s application must be made before the end of the 4th tax year afterthe tax year mentioned in subsection (5).

(9) In the application of section 102 of the Finance Act 2009 (repayment interest onsums to be paid by HMRC) in relation to a repayment under this section, therepayment interest start date is the date on which HMRC receive the person’sapplication.

(10) A repayment under this section, and any interest in respect of it under section102 of the Finance Act 2009, are to be paid out of the National Insurance Fundor the Northern Ireland National Insurance Fund.


(11) A person who qualifies for an employment allowance for a tax year may notreceive it otherwise than by way of deductions or a repayment under thissection.

5 Power to amend the employment allowance provisions

(1) The Treasury may by regulations amend the employment allowanceprovisions—

(a) so as to increase or decrease a person’s employment allowance for a taxyear, or

(b) so as to add to, reduce or modify the cases in which a person cannotqualify for an employment allowance for a tax year or in whichliabilities to pay secondary Class 1 contributions are “excludedliabilities”.

(2) Section 175(3) to (5) of SSCBA 1992 (various supplementary powers) applies tothe power to make regulations conferred by this section.

(3) The power conferred by section 175(4) of SSCBA 1992, as applied by subsection(2), includes (in particular) power to make the provision mentioned in section175(4) by way of amendments to the employment allowance provisions.

(4) Regulations under this section must be made by statutory instrument.

(5) A statutory instrument containing (with or without other provision)—(a) regulations falling within subsection (1)(a) which decrease a person’s

employment allowance for a tax year, or(b) regulations falling within subsection (1)(b),

may not be made unless a draft has been laid before, and approved by aresolution of, each House of Parliament.

(6) A statutory instrument—(a) which contains regulations falling within subsection (1)(a) which

increase a person’s employment allowance for a tax year, and(b) which does not have to be approved in draft under subsection (5),

must be laid before Parliament after being made.

(7) Regulations contained in a statutory instrument which is required to be laidbefore Parliament under subsection (6) cease to have effect at the end of theperiod of 40 days after the day on which the instrument is made unless, beforethe end of that period, the instrument is approved by a resolution of eachHouse of Parliament.

(8) If regulations cease to have effect as a result of subsection (7), that does not—(a) affect anything previously done by virtue of the regulations, or(b) prevent the making of new regulations to the same or a similar effect.

(9) In calculating the period of 40 days for the purposes of subsection (7), noaccount is to be taken of any time during which Parliament is dissolved orprorogued or during which either House is adjourned for more than 4 days.

6 Decisions and appeals about entitlements to make deductions etc

(1) In Part 2 of the Social Security Contributions (Transfer of Functions, etc) Act1999 (decisions and appeals), in section 8(1) (decisions of officers of Revenue


and Customs), after paragraph (e) insert—“(ea) to decide whether a person is or was entitled to make a

deduction under section 4 of the National InsuranceContributions Act 2014 (deductions etc of employmentallowance) and, if so, the amount the person is or was entitledto deduct,

(eb) to decide whether a person is or was entitled to a repaymentunder that section and, if so, the amount of the repayment,”.

(2) In Part 3 of the Social Security Contributions (Transfer of Functions, etc)(Northern Ireland) Order 1999 (S.I. 1999/671) (decisions and appeals), inArticle 7(1) (decisions of officers of Revenue and Customs), after paragraph (e)insert—

“(ea) to decide whether a person is or was entitled to make adeduction under section 4 of the National InsuranceContributions Act 2014 (deductions etc of employmentallowance) and, if so, the amount the person is or was entitledto deduct,

(eb) to decide whether a person is or was entitled to a repaymentunder that section and, if so, the amount of the repayment,”.

7 Retention of records etc

(1) In Schedule 1 to SSCBA 1992 (supplementary provisions relating to nationalinsurance contributions), in paragraph 8(1) (general regulation-makingpowers), after paragraph (a) insert—

“(aa) for requiring persons to maintain, in such form and manneras may be prescribed, records of such matters as may beprescribed for purposes connected with the employmentallowance provisions (within the meaning of the NationalInsurance Contributions Act 2014), and to retain the recordsfor so long as may be prescribed;”.

(2) In Schedule 1 to SSCB(NI)A 1992 (supplementary provisions relating tonational insurance contributions), in paragraph 8(1) (general regulation-making powers), after paragraph (a) insert—

“(aa) for requiring persons to maintain, in such form and manneras may be prescribed, records of such matters as may beprescribed for purposes connected with the employmentallowance provisions (within the meaning of the NationalInsurance Contributions Act 2014), and to retain the recordsfor so long as may be prescribed;”.

(3) In paragraph 26 of Schedule 4 to the Social Security (Contributions)Regulations 2001 (S.I. 2001/1004) (retention of records), after sub-paragraph(4) insert—

“(4A) Sub-paragraph (4B) applies in relation to an employer who makesdeductions, or applies for a repayment, under section 4 of theNational Insurance Contributions Act 2014 on account of anemployment allowance for which the employer qualifies for a taxyear (or who intends to do so).

(4B) So far as they are not otherwise covered by sub-paragraph (4),“contribution records” includes any documents or records relatingto—


(a) the employer’s qualification for the employment allowance,or

(b) the calculation of any amount that has been, or could be,deducted or repaid under section 4 of the National InsuranceContributions Act 2014 on account of the employmentallowance.”

(4) The amendment made by subsection (3) is to be treated as having been madeby the Treasury using the powers conferred by paragraph 8(1)(aa) of Schedule1 to SSCBA 1992 (as inserted by subsection (1)) and paragraph 8(1)(aa) ofSchedule 1 to SSCB(NI)A 1992 (as inserted by subsection (2)).

(5) In section 110ZA of the Social Security Administration Act 1992 (powers to callfor documents etc), in subsection (2)(a), after “Benefits Act” insert “or theNational Insurance Contributions Act 2014”.

(6) In section 104ZA of the Social Security Administration (Northern Ireland) Act1992 (powers to call for documents etc), in subsection (2)(a), after “Benefits Act”insert “or the National Insurance Contributions Act 2014”.

8 Commencement of the employment allowance provisions etc

Sections 1 to 7 and Schedule 1 come into force on 6 April 2014.

Introduction of age-related secondary percentage

9 Reduction of secondary Class 1 contributions for certain age groups

(1) SSCBA 1992 is amended as follows.

(2) In section 9 (calculation of secondary Class 1 contributions)—(a) in subsection (1) for “the secondary percentage” substitute “the relevant

percentage”, and(b) after subsection (1) insert—

“(1A) For the purposes of subsection (1) “the relevant percentage” is—(a) if section 9A below applies to the earnings, the age-

related secondary percentage;(b) otherwise, the secondary percentage.”

(3) After section 9 insert—

“9A The age-related secondary percentage

(1) Where a secondary Class 1 contribution is payable as mentioned insection 6(1)(b) above, this section applies to the earnings paid in the taxweek, in respect of the employment in question, if the earner fallswithin an age group specified in column 1 of the table in subsection (3).

(2) For the purposes of section 9(1A)(a) above, the age-related secondarypercentage is the percentage for the earner’s age group specified incolumn 2 of the table.

(3) Here is the table—


(4) The Treasury may by regulations amend the table—(a) so as to add an age group in column 1 and to specify the

percentage in column 2 for that age group;(b) so as to reduce (or further reduce) the percentage specified in

column 2 for an age group already specified in column 1(whether for the whole of the age group or only part of it).

(5) A percentage specified under subsection (4)(a) must be lower than thesecondary percentage.

(6) For the purposes of this Act a person is still to be regarded as beingliable to pay a secondary Class 1 contribution even though the amountof the contribution is £0 because the age-related secondary percentageis 0%.

(7) The Treasury may by regulations provide that, in relation to an agegroup specified in the table, there is to be for every tax year an uppersecondary threshold for secondary Class 1 contributions.That threshold is to be the amount specified for that year by regulationsmade by the Treasury.

(8) Subsections (4) and (5) of section 5 above (which confer power toprescribe an equivalent of a secondary threshold in relation to earnerspaid otherwise than weekly), and subsection (6) of that section as itapplies for the purposes of those subsections, apply for the purposes ofan upper secondary threshold in relation to an age group as they applyfor the purposes of a secondary threshold.

(9) Where—(a) a secondary Class 1 contribution is payable as mentioned in

section 6(1)(b) above,(b) the earner falls within an age group in relation to which

provision has been made under subsection (7), and(c) the earnings paid in the tax week, in respect of the employment

in question, exceed the current upper secondary threshold (orthe prescribed equivalent) in relation to the age group,

this section is not to apply to the earnings so far as they exceed thatthreshold (or the prescribed equivalent); and for the purposes of section9(1) above the relevant percentage in respect of the earnings so far asthey exceed that threshold (or the prescribed equivalent) is,accordingly, to be the secondary percentage.

(10) In subsections (7) to (9) references to an age group include a part of anage group.”

(4) In section 122(1) (interpretation of Parts 1 to 6), at the appropriate place

Age group Age-related secondary percentage

Under 21 0%


insert—““age-related secondary percentage” is to be construed in

accordance with section 9A(2) above;”.

(5) In section 176(1)(a) (parliamentary control: instruments subject to affirmativeprocedure) after “section 4C;” insert—

“section 9A(7);”.

(6) SSCB(NI)A 1992 is amended as follows.

(7) In section 9 (calculation of secondary Class 1 contributions)—(a) in subsection (1) for “the secondary percentage” substitute “the relevant

percentage”, and(b) after subsection (1) insert—

“(1A) For the purposes of subsection (1) “the relevant percentage” is—(a) if section 9A below applies to the earnings, the age-

related secondary percentage;(b) otherwise, the secondary percentage.”


“9A The age-related secondary percentage

(1) Where a secondary Class 1 contribution is payable as mentioned insection 6(1)(b) above, this section applies to the earnings paid in the taxweek, in respect of the employment in question, if the earner fallswithin an age group specified in column 1 of the table in subsection (3).

(2) For the purposes of section 9(1A)(a) above, the age-related secondarypercentage is the percentage for the earner’s age group specified incolumn 2 of the table.

(3) Here is the table—

(4) The Treasury may by regulations amend the table—(a) so as to add an age group in column 1 and to specify the

percentage in column 2 for that age group;(b) so as to reduce (or further reduce) the percentage specified in

column 2 for an age group already specified in column 1(whether for the whole of the age group or only part of it).

(5) A percentage specified under subsection (4)(a) must be lower than thesecondary percentage.

(6) For the purposes of this Act a person is still to be regarded as beingliable to pay a secondary Class 1 contribution even though the amountof the contribution is £0 because the age-related secondary percentageis 0%.

Age group Age-related secondary percentage

Under 21 0%


(7) The Treasury may by regulations provide that, in relation to an agegroup specified in the table, there is to be for every tax year an uppersecondary threshold for secondary Class 1 contributions.That threshold is to be the amount specified for that year by regulationsmade by the Treasury.

(8) Subsections (4) and (5) of section 5 above (which confer power toprescribe an equivalent of a secondary threshold in relation to earnerspaid otherwise than weekly), and subsection (6) of that section as itapplies for the purposes of those subsections, apply for the purposes ofan upper secondary threshold in relation to an age group as they applyfor the purposes of a secondary threshold.

(9) Where—(a) a secondary Class 1 contribution is payable as mentioned in

section 6(1)(b) above,(b) the earner falls within an age group in relation to which

provision has been made under subsection (7), and(c) the earnings paid in the tax week, in respect of the employment

in question, exceed the current upper secondary threshold (orthe prescribed equivalent) in relation to the age group,

this section is not to apply to the earnings so far as they exceed thatthreshold (or the prescribed equivalent); and for the purposes of section9(1) above the relevant percentage in respect of the earnings so far asthey exceed that threshold (or the prescribed equivalent) is,accordingly, to be the secondary percentage.

(10) In subsections (7) to (9) references to an age group include a part of anage group.”

(9) In section 121(1) (interpretation of Parts 1 to 6), at the appropriate placeinsert—

““age-related secondary percentage” is to be construed inaccordance with section 9A(2) above;”.

(10) In section 172(11A) (parliamentary control: instruments subject to affirmativeprocedure) after “4C,” insert “9A(7),”.

(11) The following come into force at the end of the period of 2 months beginningwith the day on which this Act is passed—

(a) any power conferred on the Treasury by virtue of this section to makeregulations, and

(b) the amendments made by subsections (5) and (10).

(12) So far as not already brought into force by subsection (11), the amendmentsmade by this section come into force on 6 April 2015.

Application of general anti-abuse rule to national insurance contributions

10 GAAR to apply to national insurance contributions

(1) In Part 5 of the Finance Act 2013 (general anti-abuse rule)—(a) references to tax, other than in references to particular taxes, include

national insurance contributions, and


(b) references to a charge to tax include a liability to pay national insurancecontributions.

(2) Section 206(3) of that Act (list of taxes to which the general anti-abuse ruleapplies) has effect as if it included a reference to national insurancecontributions.

(3) Section 207 of that Act (meaning of “tax arrangements” and “abusive”) haseffect as if, in subsection (4)(a), after “income,” there were inserted “earnings(within the meaning of Part 1 of the Social Security Contributions and BenefitsAct 1992 or Part 1 of the Social Security Contributions and Benefits (NorthernIreland) Act 1992),”.

(4) Adjustments to be made in respect of national insurance contributions undersection 209 of the Finance Act 2013 (counteracting the tax advantages) may bemade by a notice given under paragraph 12 of Schedule 43 to that Act (noticeof final decision).

(5) For the purposes of section 210 of that Act (consequential relievingadjustments)—

(a) if a claim under that section relates to Class 4 national insurancecontributions, Schedule 1A to the Taxes Management Act 1970 (as thatSchedule applies in relation to such contributions) applies to it, and

(b) if a claim under that section relates to any other class of nationalinsurance contributions, it must be made in such form and manner, andcontain such information, as HMRC may require.

(6) Adjustments to be made in respect of national insurance contributions underthat section may be made by a notice given under subsection (7) of that section.

(7) This section has effect in relation to tax arrangements (within the meaning ofPart 5 of the Finance Act 2013 as modified by this section) entered into on orafter the day on which this Act is passed.

(8) Subsections (9) and (10) apply where the tax arrangements—(a) would not have been tax arrangements but for the modifications made

by this section, and(b) form part of other arrangements entered into before the day on which

this Act is passed.

(9) The other arrangements are to be ignored for the purposes of section 207(3) ofthe Finance Act 2013, subject to subsection (10).

(10) Account is to be taken of the other arrangements for the purposes of thatsection if, as a result, the tax arrangements would not be abusive.

(11) In this section—“abusive”, “arrangements” and “HMRC” have the same meaning as in

Part 5 of the Finance Act 2013;“national insurance contributions” means contributions under either Part

1 of SSCBA 1992 or Part 1 of SSCB(NI)A 1992.

11 Power to modify application of GAAR to national insurance contributions

(1) Where a modification is made to Part 5 of the Finance Act 2013 (general anti-abuse rule) that does not apply in relation to national insurance contributions(“the tax only modification”), the Treasury may by regulations—


(a) make provision for the purpose of applying the tax only modificationin relation to national insurance contributions (with or withoutmodifications),

(b) make provision in relation to national insurance contributionscorresponding to the tax only modification, or

(c) otherwise modify the general anti-abuse rule, as it has effect in relationto national insurance contributions, in consequence of, or for thepurpose of making provision supplementary or incidental to, the taxonly modification.

(2) Regulations under this section—(a) may amend, repeal or revoke any provision of an Act or instrument

made under an Act (whenever passed or made),(b) may make consequential, incidental, supplementary, transitional,

transitory or saving provision, and(c) may make different provision for different cases, classes of national

insurance contributions or purposes.

(3) Regulations under this section must be made by statutory instrument.

(4) A statutory instrument containing (with or without other provision)regulations under this section that amend or repeal a provision of an Act maynot be made unless a draft has been laid before, and approved by a resolutionof, each House of Parliament.

(5) A statutory instrument containing regulations under this section that does nothave to be approved in draft under subsection (4) is subject to annulment inpursuance of a resolution of either House of Parliament.

(6) In this section—“general anti-abuse rule” has the same meaning as in Part 5 of the Finance

Act 2013;“national insurance contributions” means contributions under either Part

1 of SSCBA 1992 or Part 1 of SSCB(NI)A 1992.

Oil and gas workers on the continental shelf

12 Oil and gas workers on the continental shelf: secondary contributors etc

(1) Section 120 of SSCBA 1992 (employment at sea: continental shelf operations) isamended as follows.

(2) In subsection (1), after “persons” insert “(“continental shelf workers”)”.

(3) In subsection (3)— (a) for “the regulations” substitute “regulations under subsection (1)”, and(b) for “such person” substitute “continental shelf worker”.

(4) After that subsection insert—

“(4) The Treasury may also, by regulations, make provision for, and inconnection with, the issue by Her Majesty’s Revenue and Customs ofcertificates to prescribed persons who are, by virtue of regulationsunder subsection (1), to be treated as the secondary contributor inrelation to the payment of earnings to or for the benefit of one or morecontinental shelf workers—


(a) confirming that the prescribed person’s liabilities to paycontributions in respect of the continental shelf workersspecified or described in the certificate are being met by anotherperson, and

(b) discharging the prescribed person, while the certificate is inforce, from liability to make any payments in respect of thecontributions, in the event that the other person fails to paythem in full.

(5) Regulations under subsection (4) may, in particular, make provisionabout—

(a) applying for a certificate;(b) the circumstances in which a certificate may, or must, be issued

or cancelled;(c) the form and content of a certificate;(d) the effect of a certificate (including provision modifying the

effect mentioned in subsection (4)(b) or specifying furthereffects);

(e) the effect of cancelling a certificate.”

Partnerships

13 Class 4 contributions: partnerships



“18A Class 4 contributions: partnerships

(1) The Treasury may by regulations—(a) modify the way in which liabilities for Class 4 contributions of

a partner in a firm are determined, or(b) otherwise modify the law relating to Class 4 contributions,

as they consider appropriate to take account of the passing or makingof a provision of the Income Tax Acts relating to firms or partners infirms.

(2) “Firm” has the same meaning as in the Income Tax (Trading and OtherIncome) Act 2005 (and includes a limited liability partnership inrelation to which section 863(1) of that Act applies); and “partner” is tobe read accordingly and includes a former partner.

(3) Regulations under this section may have retrospective effect; but theymay not have effect before the beginning of the tax year in which theyare made.”

(3) In section 176(1)(a) (parliamentary control: instruments subject to affirmativeprocedure), after “section 18;” insert—

“section 18A;”.




“18A Class 4 contributions: partnerships

(1) The Treasury may by regulations—(a) modify the way in which liabilities for Class 4 contributions of

a partner in a firm are determined, or(b) otherwise modify the law relating to Class 4 contributions,

as they consider appropriate to take account of the passing or makingof a provision of the Income Tax Acts relating to firms or partners infirms.

(2) “Firm” has the same meaning as in the Income Tax (Trading and OtherIncome) Act 2005 (and includes a limited liability partnership inrelation to which section 863(1) of that Act applies); and “partner” is tobe read accordingly and includes a former partner.

(3) Regulations under this section may have retrospective effect; but theymay not have effect before the beginning of the tax year in which theyare made.”

(6) In section 172(11A) (parliamentary control: instruments subject to affirmativeprocedure), after “18,” insert “18A,”.

(7) The amendments made by this section come into force at the end of the periodof 2 months beginning with the day on which this Act is passed.

14 Limited liability partnerships


(2) After section 4A insert—

“4AA Limited liability partnerships

(1) The Treasury may, for the purposes of this Act, by regulations—(a) provide that, in prescribed circumstances—

(i) a person (“E”) is to be treated as employed in employedearner’s employment by a limited liability partnership(including where E is a member of the partnership), and

(ii) the limited liability partnership is to be treated as thesecondary contributor in relation to any payment ofearnings to or for the benefit of E as the employedearner;

(b) prescribe how earnings in respect of E’s employed earneremployment with the limited liability partnership are to bedetermined (including what constitutes such earnings);

(c) provide that such earnings are to be treated as being paid to orfor the benefit of E at prescribed times.

(2) Regulations under subsection (1) may modify the definition of“employee” or “employer” in section 163, 171, 171ZJ or 171ZS below asthe Treasury consider appropriate to take account of any provisionfalling within subsection (1)(a) to (c).

(3) If—


(a) a provision of the Income Tax Acts relating to limited liabilitypartnerships or members of limited liability partnerships ispassed or made, and

(b) in consequence, the Treasury consider it appropriate forprovision to be made for the purpose of assimilating to anyextent the law relating to income tax and the law relating tocontributions under this Part,

the Treasury may by regulations make that provision.

(4) The provision that may be made under subsection (3) includesprovision modifying any provision made by or under this Act.

(5) Regulations under this section are to be made with the concurrence ofthe Secretary of State.

(6) Section 4(4) of the Limited Liability Partnerships Act 2000 does notlimit the provision that may be made by regulations under thissection.”

(3) In section 4B (power to make retrospective provision in consequence ofretrospective tax legislation), in subsection (3), after paragraph (c) insert—

“(d) section 4AA (power to make provision in relation to limitedliability partnerships)”.

(4) In section 10 (Class 1A contributions: benefits in kind etc), at the end, insert—

“(11) The Treasury may by regulations modify the law relating to Class 1Acontributions in the case of an employed earner’s employment which istreated as existing by virtue of regulations under section 4AA.”


(6) After section 4A insert—

“4AA Limited liability partnerships

(1) The Treasury may, for the purposes of this Act, by regulations—(a) provide that, in prescribed circumstances—

(i) a person (“E”) is to be treated as employed in employedearner’s employment by a limited liability partnership(including where E is a member of the partnership), and

(ii) the limited liability partnership is to be treated as thesecondary contributor in relation to any payment ofearnings to or for the benefit of E as the employedearner;

(b) prescribe how earnings in respect of E’s employed earneremployment with the limited liability partnership are to bedetermined (including what constitutes such earnings);

(c) provide that such earnings are to be treated as being paid to orfor the benefit of E at prescribed times.

(2) Regulations under subsection (1) may modify the definition of“employee” or “employer” in section 159, 167, 167ZJ or 167ZS below asthe Treasury consider appropriate to take account of any provisionfalling within subsection (1)(a) to (c).

(3) If—


(a) a provision of the Income Tax Acts relating to limited liabilitypartnerships or members of limited liability partnerships ispassed or made, and

(b) in consequence, the Treasury consider it appropriate forprovision to be made for the purpose of assimilating to anyextent the law relating to income tax and the law relating tocontributions under this Part,

the Treasury may by regulations make that provision.

(4) The provision that may be made under subsection (3) includesprovision modifying any provision made by or under this Act.

(5) Regulations under this section are to be made with the concurrence ofthe Department.

(6) Section 4(4) of the Limited Liability Partnerships Act 2000 does notlimit the provision that may be made by regulations under thissection.”

(7) In section 4B (power to make retrospective provision in consequence ofretrospective tax legislation), in subsection (3), after paragraph (c) insert—

“(d) section 4AA (power to make provision in relation to limitedliability partnerships)”.

(8) In section 10 (Class 1A contributions: benefits in kind etc), at the end, insert—

“(11) The Treasury may by regulations modify the law relating to Class 1Acontributions in the case of an employed earner’s employment which istreated as existing by virtue of regulations under section 4AA.”

Other provision

15 Office holders who receive “earnings” to be employed earners

(1) In section 2(1)(a) of SSCBA 1992 (definition of “employed earner”), omit“general”.

(2) In section 2(1)(a) of SSCB(NI)A 1992 (definition of “employed earner”), omit“general”.

(3) Schedule 2 makes provision that is consequential upon office holders in receiptof “earnings” (as opposed to “general earnings”) being employed earners.

(4) The amendments made by this section and Schedule 2 come into force at theend of the period of 2 months beginning with the day on which this Act ispassed.

16 Armed Forces early departure payments retrospectively disregarded

Paragraph 10A of Part 6 of Schedule 3 to the Social Security (Contributions)Regulations 2001 (S.I. 2001/1004) (payments under the Armed Forces EarlyDeparture Payments Scheme Order 2005 (S.I. 2005/437) to be disregarded) alsohas effect for the tax years 2005-06 to 2012-13 inclusive.

17 Repeal of certain redundant reliefs relating to Class 4 contributions

(1) In Schedule 2 to SSCBA 1992 (levy of Class 4 contributions with income tax)—


(a) omit paragraph 3(3), and(b) omit paragraph 9 (and the heading immediately before it).

(2) In Schedule 2 to SSCB(NI)A 1992 (levy of Class 4 contributions with incometax)—

(a) omit paragraph 3(3), and(b) omit paragraph 9 (and the heading immediately before it).

(3) The amendments made by subsections (1)(a) and (2)(a) have effect for the taxyear after the one during which this Act is passed and for subsequent tax years.

18 Certain orders and regulations in respect of Northern Ireland

(1) Section 172 of SSCB(NI)A 1992 (Assembly etc control of regulations andorders) is amended as follows.

(2) In subsection (11), for “(9)” substitute “(10)”.

(3) In subsection (11B)—(a) after “contains” insert “—

(a) ”,(b) after “129” insert “or 142(7)”, and(c) after “Act” insert “,

(b) regulations under powers conferred by any provisionmentioned in that subsection which are to be made forthe purpose of consolidating regulations to be revokedin the instrument, or

(c) regulations which, in so far as they are made underpowers conferred by any provision mentioned in thatsubsection, only replace provisions of previousregulations with new provisions to the same effect.”

(4) Section 165 of the Social Security Administration (Northern Ireland) Act 1992(regulations and orders — general) is amended as follows.

(5) In subsection (1), after “to be made by” insert “the Secretary of State,”.

(6) In subsection (3), after “the Department” insert “, the Secretary of State”.

(7) The amendments made by this section come into force at the end of the periodof 2 months beginning with the day on which this Act is passed.

General

19 HMRC administrative expenses: financial provision

(1) In section 165 of the Social Security Administration Act 1992 (adjustmentsbetween the National Insurance Fund and Consolidated Fund), in subsection(5)(a), after “adoption pay” insert “or the National Insurance Contributions Act2014”.

(2) In section 145 of the Social Security Administration (Northern Ireland) Act1992 (adjustments between the National Insurance Fund and ConsolidatedFund), in subsection (5)(a), after “adoption pay” insert “or the NationalInsurance Contributions Act 2014”.


20 Abbreviations of Acts

In this Act—“SSCBA 1992” means the Social Security Contributions and Benefits Act

1992;“SSCB(NI)A 1992” means the Social Security Contributions and Benefits

(Northern Ireland) Act 1992.

21 Short title and extent

(1) This Act may be cited as the National Insurance Contributions Act 2014.

(2) Subject to subsection (3), this Act extends to England and Wales, Scotland andNorthern Ireland.

(3) An amendment or repeal made by this Act has the same extent as the provisionamended or repealed.

National Insurance Contributions Act 2014 (c. 7)Schedule 1 — Employment allowance: rules for determining if persons are “connected”

19

S C H E D U L E S

SCHEDULE 1 Section 3

EMPLOYMENT ALLOWANCE: RULES FOR DETERMINING IF PERSONS ARE “CONNECTED”

PART 1

COMPANIES

Application

1 This Part applies for the purposes of section 3(1).

The basic rule

2 (1) Two companies are “connected” with one another if—(a) one of the two has control of the other, or(b) both are under the control of the same person or persons.

(2) In sub-paragraph (1) “control” has the same meaning as in Part 10 of CTA2010 (see sections 450 and 451 of that Act) (and a limited liability partnershipis to be treated as a company for the purposes of that Part as applied by thissub-paragraph).

(3) For this purpose, where under section 450 of that Act “C” is a limited liabilitypartnership, subsection (3) of that section has effect as if before paragraph (a)there were inserted—

“(za) rights to a share of more than half the assets, or of more thanhalf the income, of C,”.

(4) Sub-paragraphs (1) to (3) are subject to paragraphs 3 to 6.

(5) Paragraph 7 provides for further connections.

(6) In this Part “CTA 2010” means the Corporation Tax Act 2010.

Companies whose relationship is not one of substantial commercial interdependence

3 (1) This paragraph applies for the purpose of determining under paragraph 2(1)if two companies are connected with one another if the relationship betweenthe companies is not one of substantial commercial interdependence.

(2) In the application of section 451 of CTA 2010 for the purposes of thedetermination, any person to whom rights and duties fall to be attributedunder subsections (4) and (5) of that section is to be treated, for the purposesof those subsections, as having no associates.


Part 1 — Companies

20

(3) In determining for the purposes of sub-paragraph (1) if two companies havea relationship of “substantial commercial interdependence”, the followingfactors are to be taken into account—

(a) the degree to which the companies are financially interdependent(see sub-paragraph (4)),

(b) the degree to which the companies are economically interdependent(see sub-paragraph (5)), and

(c) the degree to which the companies are organisationallyinterdependent (see sub-paragraph (6)).

(4) Two companies are “financially interdependent” if (in particular)—(a) one gives financial support (directly or indirectly) to the other, or(b) each has (directly or indirectly) a financial interest in the other’s

activities.

(5) Two companies are “economically interdependent” if (in particular)—(a) they seek to realise the same economic objective,(b) the activities of one benefit the other, or(c) their activities involve common customers.

(6) Two companies are “organisationally interdependent” if (in particular) theyhave—

(a) common management,(b) common employees,(c) common premises, or(d) common equipment.

Fixed-rate preference shares

4 (1) In determining for the purposes of paragraph 2(1) if a company is under thecontrol of another, fixed-rate preference shares held by a company areignored if the company holding them—

(a) is not a close company,(b) takes no part in the management or conduct of the company which

issued the shares, or in the management or conduct of its business,and

(c) subscribed for the shares in the ordinary course of a business whichincludes the provision of finance.

(2) In sub-paragraph (1) “fixed-rate preference shares” means shares which—(a) were issued wholly for new consideration,(b) do not carry any right either to conversion into shares or securities of

any other description or to the acquisition of any additional shares orsecurities, and

(c) do not carry any right to dividends other than dividends which—(i) are of a fixed amount or at a fixed rate per cent of the nominal

value of the shares, and(ii) together with any sum paid on redemption, represent no

more than a reasonable commercial return on theconsideration for which the shares were issued.

(3) In sub-paragraph (2)(a) “new consideration” has the meaning given bysection 1115 of CTA 2010.

National Insurance Contributions Act 2014 (c. 7)Schedule 1 — Employment allowance: rules for determining if persons are “connected”Part 1 — Companies

21

(4) In sub-paragraph (1)(a) “close company” is to be read in accordance withChapter 2 of Part 10 of CTA 2010 (see, in particular, section 439 of that Act).

Connection through a loan creditor

5 (1) A company (“A”) is not under the control of another company (“B”) for thepurposes of paragraph 2(1) if—

(a) B is a loan creditor of A,(b) there is no other connection between A and B, and(c) either—

(i) B is not a close company, or(ii) B’s relationship to A as a loan creditor arose in the ordinary

course of a business which B carries on.

(2) Sub-paragraph (3) applies if—(a) two companies (“A” and “B”) are under the control of the same

person who is a loan creditor of each of them,(b) there is no other connection between A and B, and(c) either—

(i) the loan creditor is a company which is not a close company,or

(ii) the loan creditor’s relationship to each of A and B as a loancreditor arose in the ordinary course of a business which theloan creditor carries on.

(3) In determining under paragraph 2(1) if A and B are connected with oneanother, rights which the loan creditor has as a loan creditor of A, or as a loancreditor of B, are ignored.

(4) In sub-paragraph (2)(a) “control” has the same meaning as in paragraph 2(1).

(5) In this paragraph—(a) “close company” is to be read in accordance with Chapter 2 of Part

10 of CTA 2010 (see, in particular, section 439 of that Act),(b) “connection” includes a connection in the past as well as a connection

in the present and references to a connection between two companiesinclude any dealings between them, and

(c) references to a loan creditor of a company are to be read inaccordance with section 453 of CTA 2010.

Connection through a trustee

6 (1) Sub-paragraph (2) applies if—(a) two companies (“A” and “B”) are under the control of the same

person by virtue of rights or powers (or both) held in trust by thatperson, and

(b) there is no other connection between A and B.

(2) In determining under paragraph 2(1) if A and B are connected with oneanother, the rights and powers mentioned in sub-paragraph (1)(a) areignored.

(3) In sub-paragraph (1)—(a) “control” has the same meaning as in paragraph 2(1), and


Part 1 — Companies

22

(b) “connection” includes a connection in the past as well as a connectionin the present and the reference to a connection between A and Bincludes any dealings between them.

Further connections

7 (1) This paragraph applies if—(a) a company (“A”) is connected with another company (“B”), and(b) B is connected with another company (“C”).

(2) A and C are also connected with one another (if that would not otherwise bethe case).

(3) In sub-paragraph (1)(a) the reference to a company being connected withanother company is to that company being so connected by virtue ofparagraphs 2 to 6 or this paragraph, and in sub-paragraph (1)(b) thereference to a company being connected with another company is to thatcompany being so connected by virtue of paragraphs 2 to 6.

PART 2

CHARITIES

8 (1) Two charities are connected with one another for the purposes of section 3(2)if—

(a) they are connected with one another in accordance with section 993of the Income Tax Act 2007 (meaning of “connected” persons), and

(b) their purposes and activities are the same or substantially similar.

(2) In the application of section 993 of the Income Tax Act 2007 for the purposesof sub-paragraph (1)(a)—

(a) a charity which is a trust is to be treated as if it were a company (andaccordingly a person), including in this sub-paragraph;

(b) a charity which is a trust has “control” of another person if thetrustees (in their capacity as trustees of the charity) have, or any ofthem has, control of the person;

(c) a person (other than a charity regulator) has “control” of a charitywhich is a trust if—

(i) the person is a trustee of the charity and some or all of thepowers of the trustees of the charity could be exercised by theperson acting alone or by the person acting together with anyother persons who are trustees of the charity and who areconnected with the person,

(ii) the person, alone or together with other persons, has powerto appoint or remove a trustee of the charity, or

(iii) the person, alone or together with other persons, has anypower of approval or direction in relation to the carrying outby the trustees of any of their functions.

(3) A charity which is a trust is also connected with another charity which is atrust for the purposes of section 3(2) if at least half of the trustees of one ofthe charities are—

(a) trustees of the other charity,

National Insurance Contributions Act 2014 (c. 7)Schedule 1 — Employment allowance: rules for determining if persons are “connected”Part 2 — Charities

23

(b) persons who are connected with persons who are trustees of theother charity, or

(c) a combination of both,and the charities’ purposes and activities are the same or substantiallysimilar.

(4) In determining if a person is connected with another person for the purposesof sub-paragraph (2)(c)(i) or (3)(b), apply section 993 of the Income Tax Act2007 with the omission of subsection (3) of that section (and without themodifications in sub-paragraph (2)).

(5) If a charity (“A”) controls a company (“B”) which, apart from this sub-paragraph, would not be a charity—

(a) B is to be treated as if it were a charity for the purposes of section 3and this Part (including this sub-paragraph), and

(b) A and B are connected with one another for the purposes of section3(2).

(6) In sub-paragraph (5) “control” is to be read in accordance with—(a) paragraph 2(2) and (3) (but ignoring paragraphs 3 to 6), and(b) sub-paragraph (2)(b) of this paragraph.

9 (1) This paragraph applies if—(a) a charity (“A”) is connected with another charity (“B”) for the

purposes of section 3(2), and(b) B is connected with another charity (“C”) for the purposes of section

3(2).

(2) A and C are also connected with one another for the purposes of section 3(2)(if that would not otherwise be the case).

(3) In sub-paragraph (1)(a) the reference to a charity being connected withanother charity for the purposes of section 3(2) is to that charity being soconnected by virtue of paragraph 8 or this paragraph, and in sub-paragraph(1)(b) the reference to a charity being connected with another charity for thepurposes of section 3(2) is to that charity being so connected by virtue ofparagraph 8.

SCHEDULE 2 Section 15

OFFICE HOLDERS IN RECEIPT OF “EARNINGS” TO BE EMPLOYED EARNERS: CONSEQUENTIAL PROVISION

SSCBA 1992

1 SSCBA 1992 is amended as follows.

2 In section 7(1)(b) (definition of “secondary contributor” in relation to officeholders), omit “general” in both places it appears.

3 In section 163(1) (interpretation of Part 11 of that Act: statutory sick pay), inparagraph (a) of the definition of “employee”, for “general earnings (asdefined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”substitute “earnings (within the meaning of Parts 1 to 5 above)”.

National Insurance Contributions Act 2014 (c. 7)Schedule 2 — Office holders in receipt of “earnings” to be employed earners: consequential provision

24

4 In section 171(1) (interpretation of Part 12 of that Act: statutory maternitypay), in paragraph (a) of the definition of “employee”, for “general earnings(as defined by section 7 of the Income Tax (Earnings and Pensions) Act2003)” substitute “earnings (within the meaning of Parts 1 to 5 above)”.

5 In section 171ZJ(2)(a) (definition of “employee” for Part 12ZA of that Act:ordinary and additional statutory paternity pay), for “general earnings (asdefined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”substitute “earnings (within the meaning of Parts 1 to 5 above)”.

6 In section 171ZS(2)(a) (definition of “employee” for Part 12ZB of that Act:statutory adoption pay), for “general earnings (as defined by section 7 of theIncome Tax (Earnings and Pensions) Act 2003)” substitute “earnings (withinthe meaning of Parts 1 to 5 above)”.

SSCB(NI)A 1992

7 SSCB(NI)A 1992 is amended as follows.

8 In section 7(1)(b) (definition of “secondary contributor” in relation to officeholders), omit “general” in both places it appears.

9 In section 159(1) (interpretation of Part 11 of that Act: statutory sick pay), inparagraph (a) of the definition of “employee”, for “general earnings (asdefined by section 7 of the Income Tax (Earnings and Pensions) Act 2003)”substitute “earnings (within the meaning of Parts 1 to 5 above)”.

10 In section 167(1) (interpretation of Part 12 of that Act: statutory maternitypay), in paragraph (a) of the definition of “employee”, for “general earnings(as defined by section 7 of the Income Tax (Earnings and Pensions) Act2003)” substitute “earnings (within the meaning of Parts 1 to 5 above)”.

11 In section 167ZJ(2)(a) (definition of “employee” for Part 12ZA of that Act:ordinary and additional statutory paternity pay), for “emolumentschargeable to income tax under Schedule E” substitute “earnings (within themeaning of Parts 1 to 5 above)”.

12 In section 167ZS(2)(a) (definition of “employee” for Part 12ZB of that Act:statutory adoption pay), for “emoluments chargeable to income tax underSchedule E” substitute “earnings (within the meaning of Parts 1 to 5 above)”.

Pension Schemes Act 1993 (c. 48)

13 In section 181(1) of the Pension Schemes Act 1993 (general interpretation), inthe definition of “employee”, for “general earnings (as defined by section 7of the Income Tax (Earnings and Pensions) Act 2003)” substitute “earnings”.

Pension Schemes (Northern Ireland) Act 1993 (c. 49)

14 In section 176(1) of the Pension Schemes (Northern Ireland) Act 1993(general interpretation), in the definition of “employee”, for “generalearnings (as defined by section 7 of the Income Tax (Earnings and Pensions)Act 2003)” substitute “earnings”.

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